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Fed Halts Sales Of Toxic AIG Sludge Upon Realization Any Balance Sheet Unwind Crashes The Market

Tyler Durden's picture


Three weeks ago, when discussing the failed (yes, failed) Maiden Lane 2 auction by the New York Fed, we said: 'Something quite disturbing happened during today's latest attempt by the Fed to sell $3.8 billion in face amount of Maiden Lane 2 assets: it had a busted dutch auction. In fact, the auction was so massively busted, the New York Fed managed to sell only half of the bonds for sale, or $1.898 billion in 36 Cusips of the total 73 Cusips offered for sale." Subsequently we noted the sudden radiosilence from the Fed on this issue on Twitter. To be sure, every MBS trader and the kitchen sink promptly complained that the Fed was saturating the market with toxic AIG garbage, which prompted us to declare that: "unless someone opens up a release valve, we are about to see a massive
regurgitation and even more massive repricing of credit risk, first in
IG, then in HY and ABX/CMBX, and lastly, and most massively, in
equities, which continue to exist in their own world and which are now
totally disconnected with HY, which they used to track so very closely." We just got the release valve: from Bloomberg: "The Federal Reserve Bank of New York is halting its sales of mortgage bonds acquired in the rescue of American International Group Inc. "Given prevailing market conditions” for residential mortgage-backed securities, “we do not anticipate any sales of bonds in the near term or until such time as the New York Fed deems it will achieve value for the public," Jack Gutt, a New York Fed spokesman said in an e-mail." Uh, what prevailing market conditions: a Nasdaq which has ripped over 100 points in one week (granted on no volume and on unprecedented market manipulation but so what). Regardless, this is a huge slap in the face for the Fed, which has just proven that even in a surging market it can not unwind an amount from its book that is less than 1% of its total asset holdings without actually crashing the market.

We certainly can not wait for BTIG's spin on this news tomorrow.

In the meantime, we remind readers of what we predicted, accurately, on June 9:

If dealers and funds are unable to handle a mere $31 billion MBS portfolio disposition, and its weekly sale (think of its as a reverse repo) is starting to cause massive ripples in the bond market, just what will happen when dealers are forced to hold back the tens of billions in weekly bond auctions they freely flip back to the Fed now. In other words, is the credit market on the verge of a oversaturation implosion (hence the title)?

Good luck with that end of QE2 boys. You will need it.


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Thu, 06/30/2011 - 17:30 | 1416996 ghostfaceinvestah
ghostfaceinvestah's picture

Nice timing, given that the ABX jumped due to the BAC settlement.

Thu, 06/30/2011 - 18:13 | 1417130 Rider
Rider's picture

Fed's balance sheet is unwindable, as Tyler said; GL trying to sell that g-bage.

Thu, 06/30/2011 - 18:22 | 1417148 max2205
max2205's picture

Crash what market? The 30 yr -5% this week?

Crash the unlisted MBS market which I can see?

Thu, 06/30/2011 - 18:49 | 1417201 unununium
unununium's picture

You mean UN-unwindable.

Does anyone know, regarding QE lite, whether the amount reinvested is the face value of maturing securities, or what the fed actually received?


Thu, 06/30/2011 - 18:44 | 1417197 SwingForce
SwingForce's picture

These are uncollectible receivables- these mortgages have already been paid off thru TARP etc, The Top5 banks have stopped foreclosures, why? They have already been paid for them! Take the property back, sell it, and book the loss (finally!) = INSOLVENT

Come on bitchez, its not so hard to figure out, there's more to life than PMs...

Thu, 06/30/2011 - 18:48 | 1417212 unununium
unununium's picture

Bingo.  But why take the properties now?  Wait until values recover.

But that is the best way I've found to explain the ripoff to Joe 6pack.

 - Banks are not being paid back

 - Banks are being made whole by the government

 - Banks ALSO keep the note and get the property when foreclosed on

Fri, 07/01/2011 - 00:10 | 1417929 DaveyJones
DaveyJones's picture

Where can I get my clients this kind of criminal sentence

Thu, 06/30/2011 - 17:36 | 1417003 Gubbmint Cheese
Gubbmint Cheese's picture

Ghost! Good to see you again!

Thu, 06/30/2011 - 17:39 | 1417012 ghostfaceinvestah
ghostfaceinvestah's picture

Another positive is the Fed will keep all the coupons which they can then send to the Treasury as "profit".


Thu, 06/30/2011 - 17:39 | 1417014 metastar
metastar's picture

Since when was the FEDup ever in charge of achieving value for the public? These SOBs are in it for themselves and the banks who own them!

Thu, 06/30/2011 - 17:50 | 1417061 Rynak
Rynak's picture

The more disturbing thing is, that they are now outrightly saying, that those assets are worth shit on the open market, even though it is priced a little bit different in their books.

Thu, 06/30/2011 - 18:03 | 1417092 ghostfaceinvestah
ghostfaceinvestah's picture

They were also driving down the mark-to-market value of the crap still sitting on the banks books.  Doh!

AIG was getting their revenge for pressing the issue and making a bid for those things.

Thu, 06/30/2011 - 18:06 | 1417099 Rynak
Rynak's picture

Now, come on. Let's please keep reason out of this.

Thu, 06/30/2011 - 19:05 | 1417258 knukles
knukles's picture

To reason or not to reason...
The Fed is Not Exempt form Wall Street Skullfuckings.
The Fed got their own ass into the sling.
Nobody on the Street, well maybe a well known asset manager or two, helped them buy the crap. 
They didn't go through a broker.
The Fed's own rootin' tootin' top notch market experts bouhgt the stuff.
Came out of the Holy Jesus H Fucking Christ WTF is This Shit Books of the Should Have Been Mothballed to be Used as a Fuckushittnme Cork company that should just been let fucking die.
Since no Wall Street entity show feality in the purchase, and BTfuckingW by Wall Street's rule book, you shoulda damned well bought the stuff through the Street and this wouldn't have happened.
Liar liar pants on fire.
So, if you gets fucked because you bought and own a warm smelly pile, we ain't gonna help you un-own it now, are we?
Think we're in this business to loose money, asshole?

Because it's worth.......


Else we'd a bid you down, hard for it, and told you what a great fucking job we did rescuing you.... but we didn't.
Did we?

So, taxpayer, whaddya think about that now?

PS... This Shit was Bought on Timmah's Watch

Thu, 06/30/2011 - 19:10 | 1417259 knukles
knukles's picture

And I can tell ya how this'll end.

Some poor mid level clerk's gonna get fired from the Fed because somebody responsible for buying this shit'll say that he pulled the wrong cusips off of Bloomberg to get the information to value the crap....


Thu, 06/30/2011 - 17:39 | 1417015 Cdad
Cdad's picture

it can not unwind an amount from its book that is less than 1% of its total asset holdings without actually crashing the market. continue the sale of the assets and crash the market.  We all know that this is the necessary precondition of QE3, money printing being the only thing holding up the stock market.

So let's get back on it and dump the toxic sludge.  What, are we saving it for rainy days? 

What a preposterous set of circumstances, from end to end, coast to coast, asset class to asset class, from perpetrator to perpetrator.


Thu, 06/30/2011 - 17:56 | 1417069 Rynak
Rynak's picture

They can't do it in a too obvious way - need to not kick out the supports of willful suspense of disbelief.

Thu, 06/30/2011 - 18:14 | 1417131 citta vritti
citta vritti's picture

just so as to cause maximum pain for everyone not prepared, even if in on it or forewarned, so the salve can be called healing “O Balm a", no longer o-bomb-ya.

Thu, 06/30/2011 - 19:49 | 1417361 Cdad
Cdad's picture

They can't do what in an obvious way?  Sell sludge?  Buy sludge?  Who is lost on the point that it is sludge?

Seriously, the sludge needs to be sold at a loss.  It doesn't matter the time frame or market conditions.  It would have been better had the sludge been sold at a loss while the sludge was in the banks, but Ben Bernanke thought he had a better idea...which is namely to pass the loss onto the taxpayers.

However, the problem with this being obvious is that it is obvious.  This was the most important ZeroHedge story of the day and I, for one, want the sludge dumped and the loss posted.  

Who the fuck does anyone think they are fooling with this nonsense?

Thu, 06/30/2011 - 23:27 | 1417825 Founders Keeper
Founders Keeper's picture

[So let's get back on it and dump the toxic sludge.  What, are we saving it for rainy days?]---Cdad

Hi Cdad.

What are we saving it for? IMO, no one wants to be the one blamed for tipping the world into the greatest economic collapse in the history of mankind.

Not the Fed. Not the Obama administration. Not the Democrats or the Republicans. Not the FDIC. Not China. Not Germany, ECB, or IMF. Not Bill Gross. Not OPEC. And not the ratings agencies.

Regardless. A collapse on some order of magnitude is imminent. Just a matter of weeks or months. No one wants to get caught holding the murder weapon when the lights go on.


Thu, 06/30/2011 - 17:41 | 1417026 ebworthen
ebworthen's picture


Halted sales right at the end of QE2 and before the "Independence Day" holiday.

King George III is laughing somewhere right about now...


Thu, 06/30/2011 - 17:41 | 1417028 Sudden Debt
Sudden Debt's picture

I tought they where suposed to be such a good deal?


could they have been wrong?...?


Thu, 06/30/2011 - 17:42 | 1417032 tedsmojo
tedsmojo's picture

Long chaos until we drill to the center of the earth...

Thu, 06/30/2011 - 17:47 | 1417044 emsolý
emsolý's picture

Everybody's saving / pre-committing / earmarking their funds for next year's IPO of The Facebook.

Thu, 06/30/2011 - 17:52 | 1417057 CrashisOptimistic
CrashisOptimistic's picture

This is a huge story and explains the sharp drop in high yield bonds last week, and their subsequent recovery.

The subtext is there is no escape from oil's crushing grip.  The Fed will not be allowed to unwind.  It's all downhill from here.

Thu, 06/30/2011 - 18:02 | 1417073 Franken_Stein
Franken_Stein's picture


So the Fed is stuck with RMBS and CDOs forever !


And this is where Ron Paul comes in handy.


If he abolishes the Fed, all the Fed balance sheet will be cleared and thus the Fed will have to suffer massive writedowns in the 2 minutes before it ceases to exist.

But that's irrelevant by that time anyway.


If the Fed isn't abolished and it clears its blance sheet, what would happen ?

Can you declare an MBS, that the Fed bought from AIG with newly created fiat money, nonexistant ?

A 100% loss and subsequent discardation ?


If so, then you have a Fed debt/liability (-) on the Fed balance sheet where there is no corresponding CB money (+) anymore or any security/asset that the Fed bought with it.


So all of that irredeemable CB fiat debt has to be canceled too.

It's just a simple mathematical operation.

Just some trillions.

A paper loss is turned into a REAL loss.

At a certain point in time this loss will have to be realized anyway.


They just hoped that the loss being realised at he Fed will be less painful than when the shit had exploded while still on AIG's balance sheet.


Do we not live in a crazy world, where balance sheets and some stupid numbers representing "money" seem to matter more than people and their fate ?


Thu, 06/30/2011 - 18:08 | 1417116 Franken_Stein
Franken_Stein's picture


I mean how can a bank with infinite paper money creation and corresponding debt creation ever suffer losses ? It can't.

As soon as you discard debt, you can immediately spawn new debt.


Thu, 06/30/2011 - 18:51 | 1417205 Rynak
Rynak's picture

The problem is that you cannot just simply abolish a currency - only trade it for a new currency. You COULD abolish all debt held by banks, by just nuking the banks..... but then, what happens to the stocks? And the lenders to those banks?

All this globalized "everything connects to everything" is one big pile of steaming shit! It is a recipe for disaster, because economic nuclear explosions can no longer be contained. To fix this stuff at all, you need magic... you would - with the iron fist of the state, have to give a fuck about financial rules, and just DECLARE wealth. But what would happen, if in the current interconnected world, someone would dare to do this?

Problem is, someone will have to start doing just that, sooner or later.

Thu, 06/30/2011 - 19:09 | 1417280 knukles
knukles's picture

Investment Banking 101

Old Fed creates New Fed.
New Fed leaves old shit behind in Old Fed.
Difference is recorded on the books as "Goodwill" and amortized over the remaining life of the Feds.
Remaining life is defines as the longer of the first recorded manned landing on Alpha Centauri or One Bazillion years.
Long live the Republic.

(Flyovers, national anthem, balloons, confetti)

What's the problem?

Thu, 06/30/2011 - 19:19 | 1417292 Rynak
Rynak's picture

The only problem is that it fixed nothing, and just kicked the can.

I can see the (non-)reason in the insanity though: Compensate until everything collapses, but by then you won't be there anymore. Basically: Let those living longer than me, eat scorched eath.

Problem is: I will still be alive, when it all comes crashing down - the only question left is if they will find me, and what percentage of civilization will still be alive to be looking for me.

Pure egomania.

Thu, 06/30/2011 - 19:18 | 1417306 jm
jm's picture

So I assume a loss severity of 0.57 of par.  I can buy subprime at 0.34.

Talk me out of buying this stuff.

Thu, 06/30/2011 - 19:20 | 1417313 Rynak
Rynak's picture

Please explain? I'm not very familiar with established economic terms. I.e., what you you mean with "loss severity of 0.57 of par"?

Thu, 06/30/2011 - 19:31 | 1417329 jm
jm's picture

Let's keep it simple.


I buy a security for $1.  The loss severity means I stand to lose 57 cents of that dollar.

However, I can buy the security not for a dollar, but for 34 cents. 

How is this worhtless?  This is a carry monster.  Inflation helps it.  And deflation?  Well, its pretty deflated right now.


Thu, 06/30/2011 - 19:43 | 1417341 Rynak
Rynak's picture

But inflation is just stealth-taxing......... and it we were really evil, we could argue that all accumulated debt, may as well be expressed with future inflation.

So, what does that mean, if at some point in the future, we want to neutralize those insane debt levels?

Well, if we inflate it away, we basically simply tax everyone linear to their wealth. The question open is how other prices react, especially wages. The more wages increase, the more we bias this giant reset towards corporations. The less wages increase, the more we bias it towards workers. Considering current levels of unemployment, can workers take significantly more burden at all, or would it just either be compensated by taxes (and thus biased towards employers) or result in millions dying?

And i may add: the longer the can is kicked down the road, the more bloody this will be.

Which brings me back to my previous post: Obviously, a lot of people will be pissed. What i as a plutocratic asshole am betting on, is that i cheated by converting everything to non-inflatable inflation-resistant hard assets, and that the masses will not find and lynch me.... or in other words: That i can rob everyone, leave scorched earth behind, and escape consequences. And i haven't even brought war into the picture yet.

P.S.: In the big picture, it's nothing more than plain wealth distribution. By cheating the system, i according to the game rules have more claim to wealth, by robbing it from others - and i do hope that the rules are at least someway kept up, so that i keep what i did steal.

Thu, 06/30/2011 - 19:44 | 1417357 jm
jm's picture

With all due respect, you are thinking too linearly about the inflation eating away at dollars effect.  The effect is quite differetn for these securities.

Inflation helps these securities because it makes the terms more affordable over time.  So the loss severity is less than you discounted and you get price appreciation and better yield than you expected. 

We had 3-4% inflation for years before this and no one pissed their pants like they are now.  I'm certainly not saying I want inflation or that it isn't coming, but hyperinflation is so overblown at thi spoint it is a joke.  Anyway, the Weimar winners got steady income in pound-denominated bonds as the mark imploded. 

Thu, 06/30/2011 - 19:48 | 1417366 Rynak
Rynak's picture

How does it make them more affordable (and profitable), if the yields as well inflate away?

Thu, 06/30/2011 - 19:54 | 1417377 jm
jm's picture

Say you have inflation of 5% and you get a yield of 9% = figure the real return here.

Say you have inflation of 7% and the losses are less (asset performance is better) and you yield 13% instead = figure the real return here.


Thu, 06/30/2011 - 20:04 | 1417380 Rynak
Rynak's picture

IF that is the case, AND inflation does not increase (which it should if everything is fixed by just more debt/money printing), THEN yes.

P.S.: The point here is, that debt/money printing cannot just go higher forever. Once the yields go high enough, inflation/debt will automatically have to neutralize the higher yields, quite simply because the gov can no longer afford those yields, and thus they're fake!

Thu, 06/30/2011 - 20:02 | 1417395 jm
jm's picture

I could be wrong just like anybody. 

If inflation goes ballistic like the groupthink screams, I'll be a loser that thought he was buying cheap.

If, on the other hand, inflation doesn't, then at least I'll have some income.

Everybody needs to get out of the groupthink.

Thu, 06/30/2011 - 20:07 | 1417410 Rynak
Rynak's picture

Well, of course! Of course lending to a gov, that has responsible and sustainable financials, is profitable - BECAUSE HE CAN PAY BACK WHAT HE PROMISED YOU. In the kleptocratic scenario however, the gov can never actually pay back what it promises, unless the population is some magical money shitting wonder, that generates incredible tax revenues, which are NOT beyond budget balance stolen by the kleptocracy.

But once you have a parasitary system, where the net national budget balance is negative, the yields must be fake, by being offset someway. Someone who cannot afford paying interest, simply cannot pay the promised interest.

Thu, 06/30/2011 - 20:23 | 1417433 jm
jm's picture

That read like a commercial message from the "Partnership for Hopeless Fringe Theories of Doom."

Thu, 06/30/2011 - 20:26 | 1417436 Rynak
Rynak's picture

When you have no arguments left, resort to rethorics. End of discussion and waste of time.

Go back to claiming to lend to a gov, that runs a budget deficit of over a trillion, while you do the opposite. Maybe you will find some suckers. It sure as hell won't be the majority of current investors, who are not part of a bank.

Thu, 06/30/2011 - 20:26 | 1417452 jm
jm's picture

I actually thought it was pretty damn funny. 

But then again for me, it is a financial discussion.  For most on here anymore, it seems to reduce to:

  • griping about political bullshit
  • inaction in the face of the nameless
  • snuggling up to some gloom and doom

all of which help no one and no thing.


Thu, 06/30/2011 - 20:32 | 1417461 Rynak
Rynak's picture

Oh, it certainly helps people not throwing capital into the black hole, that is united states finances. Anyone argueing for lending to someone who quite simply cannot pay back, and shows no signs of intending to change anything about that, is either braindead, or is argueing for cash. Have a nice day.

Thu, 06/30/2011 - 20:36 | 1417480 jm
jm's picture

Back to square one.  Loan's already been made.  I'm buying it secondary for pennies on the dollar.

<insert do loop>

Thu, 06/30/2011 - 21:24 | 1417593 Rynak
Rynak's picture

Doesn't change anything. If the state would *constantly* *now* monetize the debt, AND prices would fully relect that inflation, you would simply get the bond exactly as much cheaper, as your losses would be decreased. All you're betting on is "it won't happen, before i've sold it again or the yield is paid". You're simply trying to be quicker and more clever than a steamroller right behind you.

If one also likes to daytrade in HFT-infested stocks, i guess that is no increased risk - perhaps even a lower one. But then again, almost no common person trades stocks anymore, for a reason. It has to do with lack of suicidal tendencies.

Thu, 06/30/2011 - 22:09 | 1417666 RockyRacoon
RockyRacoon's picture





HEY!  Get a room.

Fri, 07/01/2011 - 00:19 | 1417946 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

JM- Thanks for the info.

Thu, 06/30/2011 - 19:48 | 1417358 knukles
knukles's picture

In cases such as this, investment banking services are not meant to fix anything at all, whatsoever.  They are made available at top dollar to the highest bidder, that he may then provide the absolute best optical demonstration of absolutely nothing, at the highest cost, for the greatest impact, in the shortest period of time, raising the least questions of which there shall be none asked which make any sense, since to ask anything merely proves suspicions as to the questioner's ignorance, for the only passable observation is the classic, bullshit.
And they say I never learnt anything.

Thu, 06/30/2011 - 22:45 | 1417739 CrashisOptimistic
CrashisOptimistic's picture


Basically: Let those living longer than me, eat scorched eath.


The young boy sat in the hovel made of a mixture of rotting 2X4s from old house frames, tree branches and long strips of metal siding laid on top to serve as a roof.  The interior was 50 degrees F and it was only November.

"Grandpa?  What did you do with all the oil?"

The old man looked at the boy, and then at the structure around him.  He didn't answer.

Thu, 06/30/2011 - 18:51 | 1417220 SwingForce
SwingForce's picture

These bonds don't exist- they've been POOFED! already, they are UNDELIVERABLE. The Banksterz have been paid by TARP for these underlying mortgages, how many times can you payoff the same mortgage (duh, HOUSE!). 

This horsehit is about to backfire, bigtime. Bye Bye Timmah & Obama.

Thu, 06/30/2011 - 17:58 | 1417086 jm
jm's picture

AIG offered $15.7B for this and the Fed used BWICS instead.  Half of it DNT.

This shows you that these people don't have a clue what they are doing.

Thu, 06/30/2011 - 17:58 | 1417088 Piranhanoia
Piranhanoia's picture

Isn't this the same thing they recently tried to avoid admitting was worthless?  20, maybe 30 trillion more money is printed to buy this junk that was already paid on an insurance claim, and they are trying to sell it again when there is nothing behind it?

How long before they ask the kids to give up half the lemonade money on every sidewalk in what is left of the idea that was America?.  "cause I'm the taxman, and your working for no one but me"  (George Harrison)

Thu, 06/30/2011 - 18:10 | 1417119 kito
kito's picture

my favorite kinda articles. very insightful. thank you tyler.

Thu, 06/30/2011 - 18:11 | 1417122 cranky-old-geezer
cranky-old-geezer's picture

Fed is a waste dump for Wall Street toxic waste.  

Waste dumps never try to sell their waste back to the public.

Thu, 06/30/2011 - 19:53 | 1417368 knukles
knukles's picture

Just like Fuckushittinme, Ft. Calhoun, Los Alamos....
Just redistributed for free.

Oh, never the fuck mind.  I'm too old to fight it, but young enough to needs keep my sanity.

Thu, 06/30/2011 - 18:12 | 1417125 steelhead23
steelhead23's picture

I readily admit to being a sick puppy, but I would like to offer a solution to the NY Fed's desire to avoid having its Maiden Lane 2 auctions crash the markets.  Eat it - or more accurately, feed it to your owner institutions, with G-tube if necessary.  Let me spell this out for you.  You purchased these assets at your volition and discretion.  These securities did not and currently do not fit within the Federal Charter of your institution.  Ergo, the perception that these assets are held in trust for the United States is utter blather.  Instead, they were purchased by your institution to protect your true owners, the big banks.  Regardless of your recent regulation changes, aimed at foisting the inherent losses in this SIV onto the United States, any effort to do so would be a fraud.  Ergo - eat it.  Bon Appetit!

Thu, 06/30/2011 - 18:55 | 1417235 SwingForce
SwingForce's picture

T h e r e   a r e  no   m a i d e n l a n e    a s s e t s,  i t s a  p h a n t o m   entry on the Feds books- its a hoax, where do you think $700 Billion of TARP went? Paid Off this SAME shit, fast forward>> Foreclosures screech to a halt because now you know why there are no corresponding documents- they have been PAID!

Thu, 06/30/2011 - 18:23 | 1417153 Quintus
Quintus's picture

Jesus Christ.  It's been perfectly obvious since before the Fed started blovating about it's supposed 'Exit Strategy' in 2010 that selling this garbage back to 'Investors' was impossible.  The Fed only bought this MBS crap (From it's Wall St. originators at 100c on the $) because it's, well, crap and nobody else on earth wanted it at any price.  Why would anyone think that there's a market for it now?

Thu, 06/30/2011 - 18:33 | 1417170 SwingForce
SwingForce's picture

I said I told you so. Not only that, how many times can you foreclose on the same house???

This is like selling your delinquent receivables for 25¢ on the dollar, like Bill Collectors, but when they call they find out the loan has been paid... Hey would somebody please tell the HOMEOWNER? Naw, only Banksterz get bailed out, those fukkerz.


Thu, 06/30/2011 - 18:34 | 1417172 Greeny
Greeny's picture

"attempt by the Fed to sell $3.8 billion in face amount of Maiden Lane 2 assets: it had a busted dutch auction. In fact, the auction was so massively busted, the New York Fed managed to sell only half of the bonds for sale, or $1.898 billion in 36 Cusips of the total 73 Cusips offered for sale"

3.8 Billion? USD? Senate lunch money, pocket change for those guys.

" it can not unwind an amount from its book that is less than 1% of its total asset holdings without actually crashing the market."

They can, if they are the buyers themselves ;) as usual..

It's mouse- cat games.. Create debt Sell treasuries, buy it under

diff Entity.. Collect %, then Sell it and buy it back, delete

few zeros in the computer, done deal. If you are the only buyer and

seller, it's all fiction anyways..

Fri, 07/01/2011 - 06:14 | 1418096 Tense INDIAN
Tense INDIAN's picture

thats what I was thinking .....3.8 billion is nothing for these trillionaires...the most important thing is that they have control over money printing and the government.....

Thu, 06/30/2011 - 18:33 | 1417177 Quinvarius
Quinvarius's picture

Stock as the flow looking less and less like a probable success.

Thu, 06/30/2011 - 18:35 | 1417180 Greeny
Greeny's picture

"Good luck with that end of QE2 boys. You will need it."


Oil Release From SPR Is QE3: Ashraf Laidi

Some clues.

Thu, 06/30/2011 - 19:11 | 1417286 kito
kito's picture

saw the headline to that article, wasnt in the mood for fiction

Thu, 06/30/2011 - 18:42 | 1417184 buzzsaw99
buzzsaw99's picture

They have gone all this time trying to avoid a true price discovery and then they go and do it to themselves. hahahahahahaha! Did they think that shit would get better with age? teeheeheeheeheehee!!!

Thu, 06/30/2011 - 18:45 | 1417187 slewie the pi-rat
slewie the pi-rat's picture

unwinding = mark to market= deflationary badness.

as we end QE II, don't blink, or you'll miss the beginning of QE III. 

but, they can "mop up" allright, just by letting timmah sell his own bonds, bills, and notes.

that oughta wrap it up, pdq! 

the chicago PMI went UP!  equipment & parts for agriculure? shipping & handling? automotive?  military? 

primarily automotive, which can include all the rest, too!  fuk_u bounce?  outright lies? 

the farmers who haven't already sold their crops in the futures mkts are probably wiped out for the year given the corn, wheat, and oats prices.  i read the  styooopid usda reports, this morning.  or tried to.  frankly, i didn't see any surprises, except that for a lot of these categories of vittles which they make into skittles, this year's take, so far, was somewhat less than last year's. now, if anything will need adjusting, it will certainly be farmers' reports to the goobermint.  what a country!

but these guys paid good money (which i'm sure they borrowed, if they still could) to get this wheat & corn planted.  really high fuel.  the prices have set records; but limits down, today.  the wheat limit = 2 corn limits.  $0.60 = (2) $0.30;  both limit down, making wheat cheaper than corn.  again.  w:  614.25;  c:  620.50.

another episode of: "Price Discovery In Commodities: 2011"



Thu, 06/30/2011 - 18:54 | 1417216 Mr. Sheeple
Mr. Sheeple's picture

Why can't they just lock up all these assets in a wharehouse and throw away the key? Kinda like the end of Indianna Jones.

Thu, 06/30/2011 - 19:19 | 1417307 SwingForce
SwingForce's picture

There are no "assets", they've been POOFED!

Thu, 06/30/2011 - 20:00 | 1417390 knukles
knukles's picture

Compromise and do both.
Put the zero value poofed assets into the gold vault at Ft. Knox which holds all the gold plated tungsten bars.

A Might Fine Addition to Our National Treasure

Thu, 06/30/2011 - 19:11 | 1417275 GlassHammer
GlassHammer's picture

"until such time as the New York Fed deems it wil achieve value for the public"


So we (the taxpayers via the government) spent money to buy junk in order to spend more money and buy it again?


If we became the market for this junk (because no one wants it) then we are waiting to find the right time to sell it to ourselves? Sorry, waiting for the right time to sell it "back" to ourselves because we already paid for it once.



Thu, 06/30/2011 - 19:11 | 1417284 unununium
unununium's picture

In other words, never.

Thu, 06/30/2011 - 19:15 | 1417296 GlassHammer
GlassHammer's picture

I am going to go with "never" as well.




Thu, 06/30/2011 - 20:02 | 1417393 knukles
knukles's picture

I'll take Eternity for no value, Alex.

Thu, 06/30/2011 - 19:13 | 1417289 buzzsaw99
buzzsaw99's picture

the fed already owns that garbage. they are trying to pretend they give a $#@% about the public's best interest by trying to get the best price for dat chit. If they really cared about the public they would have committed hari kari long ago.

Thu, 06/30/2011 - 19:29 | 1417326 GlassHammer
GlassHammer's picture

I think the only thing that fell on the sword was the brain but not the body.




Thu, 06/30/2011 - 19:09 | 1417282 kito
kito's picture

in case anybody is interested, here is the latest on the health of our restaurants:

Thu, 06/30/2011 - 19:13 | 1417290 espirit
espirit's picture

Buahahahha! Fed bagholder. Nice.

Thu, 06/30/2011 - 19:32 | 1417337 GolfHatesMe
GolfHatesMe's picture

But Greece can bid on these now.  The Fed will take Euros for these, right?

Thu, 06/30/2011 - 19:43 | 1417345 AldoHux_IV
AldoHux_IV's picture

The fed is insolvent and useless-- when are we going to stop them from ruining our economy?

Thu, 06/30/2011 - 22:03 | 1417664 Zero Govt
Zero Govt's picture

soon as you stop paying tax and funding this edifice/orifice simple everyone can do it!

Fri, 07/01/2011 - 02:23 | 1418021 Mad Cow
Mad Cow's picture

taxpayers and their magic printing presses in the basement.

Thu, 06/30/2011 - 19:43 | 1417347 Quantum Nucleonics
Quantum Nucleonics's picture

And the Fed thought they were being clever by telling AIG to f-off with their bid to buy the whole toxic wad.  Stupid is as stupid does.

Thu, 06/30/2011 - 19:45 | 1417351 Angelo Misterioso
Angelo Misterioso's picture

Here's something that will likely happen in a month or so and will be another big loss for the banks - the banks are reporting to fair isaac that the delinquent homeowners are not paying their mortgages and these homeowners are having their fico scores crushed - albeit some were already subprime. what happens when a class-action lawyer steps up and gets about 10,000 of these homeowners to sue the banks for falsely reporting on something they don't hold title to? you bankers can't prove the guy owns the house and you are stupidly and falsely reporting that to fair isaac? maybe even fair isaacs gets sued...

Thu, 06/30/2011 - 21:56 | 1417641 FRN Zamboni
FRN Zamboni's picture

Something along these lines occurred to me too...what's lower than "sludge"? How about totally unsecured Linda Green sludge? How much of THIS shit sits fetid and stinking on the books? If the schlepps making these payments month after month ever put two and two together...kaboom.

Thu, 06/30/2011 - 20:47 | 1417503 gkm
gkm's picture

I think it can be safely stated that when the Fed does sell, probably lower, and they guarantee to print the money the banksters need to buy the crap and they guarantee that they will buy it back at face value if the banksters don't like it - it will be the buy of a lifetime.

Just like when the British gov sold gold and the US gov (IEA) sold crude, you want to buy when they do sell.

Thu, 06/30/2011 - 21:21 | 1417586 Buck Johnson
Buck Johnson's picture

They are damned if they do and damned if they don't.  In fact, they may not know what even to do to correct this ship.  Like any incident for example a shipwreck, there comes a time that it reaches a point of no return and it doesn't matter what you do, you will wreck.  And I think that time has came and gone over 2 years ago in regards to the US and europe economy.

Thu, 06/30/2011 - 21:59 | 1417607 Zero Govt
Zero Govt's picture

"Fed Halts Sales Of Toxic AIG Sludge"

Risk Off for Toxic Sludge it is then..

..and NY Fed painted into a corner still very much holding the paint brush and a large pot of paint no doubt wondering what the hell happened... genius!

..last goofball holding the toxic sludge gets the pointy hat . . ^

Thu, 06/30/2011 - 21:53 | 1417639 Atomizer
Atomizer's picture

Release Date: September 16, 2008

For release at 9:00 p.m. EDT


The Federal Reserve Board on Tuesday, with the full support of the Treasury Department, authorized the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) under section 13(3) of the Federal Reserve Act. The secured loan has terms and conditions designed to protect the interests of the U.S. government and taxpayers.

The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance.

The purpose of this liquidity facility is to assist AIG in meeting its obligations as they come due. This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy.

The AIG facility has a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points. AIG will be permitted to draw up to $85 billion under the facility.

The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm’s assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.

Thu, 06/30/2011 - 22:21 | 1417692 Jovil
Jovil's picture

Check how your assets stack up in John Exter's Pyramid of Assets.

Thu, 06/30/2011 - 23:24 | 1417807 Bansters-in-my-...
Bansters-in-my- feces's picture

With friends like the FED ,who needs enemy's.

And Ps....federal my ass...

Fucking thiefs more like it.

Thu, 06/30/2011 - 23:27 | 1417812 westegg
westegg's picture

Swap it for Greek debt. Problem solved! ;)

Fri, 07/01/2011 - 00:08 | 1417924 Downtoolong
Downtoolong's picture

Like a suburban family trying to downsize from a MacMansion to a three bedroom ranch, the Fed is discovering it’s a lot easier to buy things than to sell them. It’s depressing to imagine how long it will take to liquidate it all. On the bright side, at least someone in America has job security.

Fri, 07/01/2011 - 00:16 | 1417940 DaveyJones
DaveyJones's picture

On the way over the scene over the other of there

Fri, 07/01/2011 - 00:28 | 1417957 Things that go bump
Things that go bump's picture


This might be off topic, but this evening while I was preparing dinner, I saw an add by, I think it was Sokolove Law, you know, one of those adds that informs you that you may be entitled to money, one of those class action-type things. They are looking for investors who have lost money and stated that it could be due to the broker or brokerage house.  I don't recall the exact wording and they didn't mention specific brokerages, but it sounds to me like law suits are shortly going to be very thick on the ground.      


Fri, 07/01/2011 - 03:11 | 1418044 Fedophile
Fedophile's picture

Tyler, "this issue on Twitter" = 404

Fri, 07/01/2011 - 08:02 | 1418185 EB
EB's picture

Also, Treasury has been selling $10 B / mo. of its MBS portfolio since April.

Mon, 07/04/2011 - 10:00 | 1424058 SwingForce
SwingForce's picture

One other thought on a different angle: Since everybody knows what's in these ML Pools, the banksterz have ALREADY FORECLOSED on the properties with the help of MERS and Robo-signers. 

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